by O. Ritter
There are Two Basic Kinds of Life Insurance Policies: Permanent and Term Insurance.
Term Life Insurance is basic coverage that lasts for a period of time, usually 10-30 years. The ability to select a term that suits your current financial and medical needs, at a more reasonable rate, gives you a flexibility not available in the other permanent policy types. The drawback is the lack of an investment piece in the policy – when the term is up, the policy ends without any additional benefit (except that you are still alive!). It isn’t just about saving money on premiums, although affordability is a plus; remember that you get a higher death benefit per dollar spent.
For more details on term insurance please visit these useful sites from New York State Department of Financial Services, New York Life, and Prudential:
Whole Life Insurance is a form of permanent life insurance that covers you for the rest of your life, as long as you’re breathing that is! Along with the death benefit, whole life insurance also has the benefit of a savings and/or investment account, and the premiums are based on your health or medical history at the time of purchase. Look at it like a two for one investment; start young, pay less, feel a sense of relief because you’re covered, and earn interest as the years pass by. To the young readers out there, stop equating life insurance as just a death benefit and start seeing it as an investment. It’s just that simple folks. For more details on whole life insurance please visit the following websites from Prudential and Money Under 30.
Universal Life Insurance is a form of permanent life insurance (like Whole Life), but is also flexible (like Term Life). It offers lower premiums at the time of purchase and offers a savings element, invested to provide cash buildup. Premiums can be modified as a policy holder’s circumstances change. Universal insurance also offers protection for your family with procedures for leaving a legacy to them. This option could also be beneficial to business owners. With so many options, it is important to do your homework! For more details about Universal insurance and what it offers, visit the Prudential and Investopedia websites.
One last note… Different times in your life will require more coverage than others, and several strategies can help you in addressing your evolving needs that fit within your current budget. This is why I did some digging on the many types of insurance policies that may or may not be best for you today, because tomorrow things may change. Now that you have some information of what each type of insurance offers, take time to reflect and make the best decision for you and your family.